A Stagnant Economy Starts 2015

Did the Great Recession ever end?

U.S. Congressman Kevin Brady (R-TX), the top House Republican on the Joint Economic Committee issued the following statement on the today’s release by Bureau of Economic Analysis (BEA) that real GDP grew at an annual rate of 0.2 percent during the 1st-quarter of 2015.

“This is a disappointing report. Working families continue to suffer in this slow-growth Obama economy, and now the President’s ‘growth gap’ is growing larger. Our economy is now missing $1.7 trillion and 5.5 million more Americans would be back to work if the Obama recovery merely met the definition of average.”

“The substandard growth of the Obama recovery is a key factor in the disappointing job and paycheck growth. Instead of continuing to crush the private sector with regulations and higher taxes, the President needs to change course and join hands with congressional Republicans to unleash the private sector.”

Average Post-1960 Recoveries. During other recoveries lasting longer than one year, real GDP grew at an annual rate of 4.0 percent in the 23 quarters following a recession. During the strong Reagan recovery of the 1980s, real GDP grew at an annual rate of 4.8 percent over a comparable period. Real GDP has grown at an annual rate of only 2.2 percent during the current recovery.

Growth Gap. Compared with the average of other post-1960 recoveries, the growth gap in real GDP stands at $1.674 trillion (2009$), up from $1.522 trillion (2009$) last quarter. Compared with the Reagan recovery, the growth gap stands at $2.484 trillion (2009$).

Eliminating the Growth Gap. In order to eliminate the growth gap in real GDP compared with the average of other post-1960 recoveries by the end of 2016, real GDP would need to growth at an annual rate of 8.5 percent over the next seven quarters. To catch up with the Reagan recovery, real GDP would need to grow at an annual rate of 11.9 percent over the next seven quarters.